[Steve_American]

There is no such thing as a free lunch, [says MS economists as the paradigm shifts to fiscal policy and MMT as the lens to see reality.]
Introduction =>

I guess if mainstream economists use Milton Friedmanesque smears they think that will be sufficent to discredit Modern Monetary Theory (MMT). There have been a few critiques in the financial media recently along those lines. The authors tell there readers that they get the impression that MMT is just about a free lunch. Throw in Zimbabwe or Weimar are few times during the article and there you have it rather tawdry attempts at maintaining mainstream thinking when the world has entered a new era of fiscal dominance as policy makers discard their reliance on monetary policy to stabilise economies. This policy shift is diametric to what mainstream macroeconomists have been advocating for decades as they repeatedly warned that high deficits and public debt levels and large-scale central bank bond purchases would lead to disaster. However, their predictions have been dramatically wrong and provide no meaningful guidance to available fiscal space nor the consequences of these policy extremes for interest rates and inflation. The world is leaving them behind and it is interesting to see how they are trying to reposition themselves.

A few choice quotes=>

MMT is not some sort of regime or a set of policies. [Sorry, I need to add this, "Except for the Job Guarantee Program to control inflation." My words.]

A government does not suddenly ‘apply’, ‘switch to’ or ‘introduce’ MMT.

Rather, MMT is a lens which provides a better understanding of the fiat monetary system and the capacity of the currency-issuer.

By linking institutional reality with behavioural theories, it provides a more coherent framework for assessing the consequences of government policy choices.

MMT allows us to appreciate that most choices that are couched in terms of ‘budgets’ and ‘financial constraints’ are, in fact, just political choices.

Given there are no intrinsic financial constraints on a currency-issuing government, we understand that mass unemployment is a political choice.

Imagine if citizens understood that.

An MMT understanding lifts the ideological veil imposed by mainstream economics that relies on the false analogy between an income-constrained household and the currency-issuing government.

People who have read our work know that.

Further, the idea there [in an old statement by a MS economist] is [that there is] utility in keeping the wider population uninformed and functioning under the false construction that their taxes pay for government spending and all that sort of lying, because it places a discipline on politicians, who because they are untrustworthy, would otherwise go wild in their spending. [This idea] has a long history.

I discussed these issues in my – My podcast with Alan Kohler (March 30, 2020).

We apparently have reached a point in history where we hate dictators and eulogise the benefits of democracy, but don’t want the politicians we elect to have the flexibility to advance our well-being.

Or in simpler language – “because we don’t trust politicians”.

http://bilbo.economicoutlook.net/blog/?p=46502

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[Steve_American]

My insight on the “Free Lunch” thing is
that there is a big free lunch available now because of the pandemic.

This would also have been true over 1 year ago before the pandemic, because of the gap between the then current total US Gov. spending and what the Gov. could spend without inflation was very large.

If the US Gov. spent as much as MMT allows for 2 years, then there would be little free lunch. At that time the JGP would have the nation at less than 1% Un-Empl. The free lunch would be just the *additional* total savings (US private and foreign).

ISTM, that this is an important point. That the big free lunch is very temporary. However, while the increase slows a lot, Gov. spending levels off at a much increased level. this level will fight ACC, aka AGW, and make the mass of the people more happy.
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